Insolvency offenses: Examples and more

Insolvency offenses are – as the name implies – offenses related to the opening or execution of insolvency proceedings . The particular criminal offenses, which we will discuss in more detail below, are primarily for the protection of creditors , in order to ensure that their outstanding claims are met as far as possible.

Furthermore, punishment for insolvency offenses ensures that insolvency proceedings can be carried out properly . When filing for bankruptcy – this includes both regular and private bankruptcy – the public prosecutor’s office receives corresponding information . This is stipulated by law in the order for communications in civil matters (MiZi). Exceptions exist, however, in the case of proceedings against private individuals without reference to a commercial activity of the debtor.

The prosecution then checks whether insolvency offenses exist . But there is also the possibility that creditors reimburse criminal charges. In this case, the police will act and take appropriate investigations. What are the offenses in connection with the bankruptcy and what are the following, we explain below.

An offense, whether in bankruptcy, in traffic or other areas, is always characterized by three components:

  1. Existence of an offense: It must be a prohibited act under the Criminal Code (StGB) or any other law that is punishable by punishment.
  2. Illegality: the offender must have acted unlawfully. There are no justifications.
  3. Guilt: The perpetrator has acted with full awareness – culpably.

Bankruptcy: Consequential offense

One of the most well-known insolvency offenses is probably the insolvency carryover. The legal basis can be found in § 15a of the Insolvency Act (InsO). This states the following:

If a legal entity becomes insolvent or over-indebted, the members of the representative body or the liquidators must submit an opening request without culpable hesitation, but no later than three weeks after the insolvency or over-indebtedness has occurred.

In certain cases, companies are therefore required by law to file for insolvency . This is the case if they are either over-indebted or insolvent . These two terms are defined in the Bankruptcy Code as follows:

  • Insolvency: The debtor is unable to meet the due payment obligations. This is usually the case when he has discontinued his payments. (§ 17 Abs. 2 InsO)
  • Over-indebtedness: This occurs when the debtor’s assets no longer cover his existing liabilities. (§19 Abs. 2 InsO)

In order not to make insolvency offenses such as the Insolvenzverschleppung guilty companies are required & Co to within three weeks after the indebtedness and insolvency has occurred, to make an application to open insolvency proceedings.

If they do not comply with this obligation, they do not submit their application on time or correctly, it is a matter of insolvency transfer. This will be punished with imprisonment of up to three years or a fine . In case of negligence, the sentence is reduced to a maximum of one year imprisonment or a fine.

Further insolvency offenses

In addition to the bankruptcy, there are a few more insolvency offenses. According to § 283c of the Criminal Code, the creditors’ privilege belongs to this. The aim of insolvency is to satisfy all creditors equally or according to their ranking. If a creditor is favored, this runs counter to this principle. The creditor’s benefit is punishable by imprisonment of up to two years or a fine .

Also the so-called bankruptcy (§ 283 StGB) belongs to the insolvency offenses. Anyone sentenced for this must expect imprisonment of up to five years or a fine. Offenses of this kind are among other things spoken, if persons with over-indebtedness or insolvency

  • Conceal, disguise, destroy or render unusable assets,
  • consume excessive amounts through inefficient spending, play or bet,
  • Procured goods or securities by means of a loan and sell them or goods made therefrom below value or
  • Do not lead trading books or change them with the goal to make it difficult to review the financial situation.

Furthermore, the debtor’s favor is one of the insolvency offenses. According to § 283d Abs. 1 StGB the following applies:

With imprisonment of up to five years or a fine is punished who

    1. being aware of another impending insolvency or
    2. after cessation of payment, in insolvency proceedings or in proceedings for the decision to open insolvency proceedings of another

Components of another’s assets which, in the event of the opening of insolvency proceedings, belong to the estate of bankruptcy with the consent of which, for the benefit of or in its favor, it is removed or concealed or destroyed, damaged or rendered unusable in a manner contrary to the requirements of a proper business.

Other insolvency offenses include:

      • Infidelity (when persons abuse a power to harm others)
      • Violation of the accounting obligation
      • Scam
      • Withholding and embezzlement of pay
      • tax evasion
      • credit fraud
      • Withholding Social Security Contributions

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Additional consequences of insolvency offenses

As we have already mentioned, most insolvency offenders face a fine or fine. But next to it, such a crime has even more consequences. This includes, among other things, that the discharge of residual debt is denied . But why is this so momentous?

The residual debt relief takes place after successful completion of the conduct phase. All remaining debts can – with few exceptions – afterwards no longer be demanded by the creditors . The debtor is then debt free.

However, insolvency offenses for which a debtor has been sentenced to imprisonment for more than three months or a fine of more than 90 daily sentences in the last five years before the application for insolvency or following this application will result in the refusal of residual debt . This means that the entire bankruptcy process was free . The creditors can then continue to execute enforcement measures.

Other consequences of insolvency offenses include, among other things, liability for damages according to § 823 of the Civil Code (BGB) . According to the legal regulation, the following applies: If a person violates a law that applies to the protection of another person, the former is obliged to compensate for the damage . For example, if some creditors were preferred while others did not receive any money, the latter must be compensated.

In addition, it may happen that persons who have been convicted of deliberate bankruptcy offenses should no longer be active as managing directors . Furthermore, those affected must expect that there will be an entry in the certificate of good conduct .

What consequences do insolvency offenses have in private bankruptcy?

In the case of private bankruptcy, insolvency offenses, as already mentioned, mean that the discharge of residual debt is denied. Thus the insolvency procedure was free of charge. However, there are other triggers that can ensure that the remaining debt is not waived .

Among other things, this happens when debtors do not fulfill their duties during the conduct of the conduct . For example, you are required to:

      • to engage in appropriate employment or, in the case of unemployment, to seek a reasonable job,
      • to hand over the attachable income to the insolvency administrator ,
      • not to make any unauthorized payments to creditors,
      • Half of the inheritances to the insolvency administrator and
      • to report every job change.

Private bankruptcy: Does an offense lead to a refusal of residual debt relief?

What happens if a person who goes through private bankruptcy is not convicted for insolvency offenses but for other reasons ? Does this automatically lead to a refusal to clear the debt – would private bankruptcy have been in vain?

The Federal Court of Justice (BGH) has already passed an important ruling in July 2010 (Ref .: IX ZB 148/09). In principle, this question is based on the following: In the conduct-of-good conduct, insolvency debtors are obliged to work as a suitable employee or, if he or she is unemployed, demonstrably strive for a reasonable job pursuant to Section 295 (1) of the Insolvency Act.

For only if the debtor earns his own income can the seizable part of it be confiscated by the insolvency administrator and distributed to the creditors, so that the claims of the latter can at least partially be satisfied. It is well accepted that the commission of offenses during insolvency proceedings , even if they are not insolvency offenses , constitutes a breach of the duty to buy.

Who commits an offense during the private bankruptcy, does not necessarily have to fear the refusal of the remainder of the debt relief.

The debtor is finally aware that he can not pursue any gainful employment if he is convicted of a criminal offense to imprisonment . This breach of duty therefore leads to the fact that the remainder of the debt waiver can be refused by the court.

However, the BGH ruled that the commission of an offense during the conduct phase with the following imprisonment does not preclude the granting of the residual debt exemption . Rather, the creditor, who requests the refusal of the debt waiver, still credible, to what extent a violation of the acquisition obligation exists. Furthermore, he should be able to explain how the satisfaction prospects of the creditors would be affected.